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The scramble for cash is well and truly on following the demonetisation of `500 and `1,000 currency notes. But that isn't a surprise as India is increasingly becoming a currency driven economy.

Despite the huge increase in plastic cards and digital transactions in recent years, the currency in circulation as a proportion of GDP (gross domestic product) in India is the highest among emerging economies. The currency-GDP ratio stood at 10.6% at the end of March this year, the highest in 16 years. In fact, India has the highest currency-GDP ratio among BRICS (Brazil, Russia, India, China, South Africa) nations.

Interestingly, China has seen a steady decrease in the ratio over the last 16 years. China's currency-to-GDP ratio, which stood at 14.6% in 2000, hit a low of 9.1% at the end of 2015 for which data is available. The ratio was almost at the same level for India and China between 2008 and 2012. Though Russia's ratio, at 9%, is also quite high, it has also seen a decline over the last five years. The ratio has held steady at around 3% in Brazil for a decade. The ratio has also remained stable at 2.5% in South Africa, the lowest among BRICS nations. Developed countries such as the US, UK and Japan have however seen an increase in their currency-to-GDP ratios. This is because the ratio for developed nations also reflects currency held outside those countries.

The currency-GDP ratio for India, which crossed the 10% mark in 2007-08, has held steady above the double digit mark with the exception of 2009-10 when the global financial crisis roiled economies across the globe and resulted in a sharp slowdown in the Indian economy. The currency in circulation has been growing over the last few years. 

http://timesofindia.indiatimes.com/business/india-business/Indias-currency-GDP-ratio-highest-among-BRICS-nations/articleshow/55576351.cms